Monthly Archives: January 2017

Many colleges have begun sending newly admitted undergraduates “award letters” showing the types and amounts of financial aid they can expect if they enroll in those schools. If your high school senior hasn’t already received such letters, they’ll probably start arriving in the next few weeks.

So dust off your calculator because, just as with any major purchase, the key to college affordability is comparative shopping.

Unfortunately, no two award letters are alike. Each uses its own unique layout and terminology. Few offer consumer information you need to know about institutions. This makes it difficult to compare schools based on affordability.

That’s why the U.S. Department of Education created the “financial aid shopping sheet.” Thousands of colleges send it with their award letters, making it easier to compare key numbers about them.

The shopping sheet’s left side shows each school’s cost of attendance — the college’s “sticker price” for the upcoming academic year.

Next comes the grants and scholarships your student is set to receive at that college for that academic year. These discount sticker price to determine the college’s “net price.”

Then comes other types of financial aid — work-study, loans — being offered to help your student pay the school’s net price.

The shopping sheet’s right side also has useful data. These include 6-year graduation rates at universities and 3-year graduation rates at community colleges. Such rates show how schools compare to similar institutions in getting undergraduates across the finish line.

The sheet also discloses the percentage of the school’s alumni repaying their federal student loans three years after beginning to do so — indicating how well the school prepares students for gainful employment.

Finally, you’ll see the median amount the college’s students borrow in federal loans, and their median monthly payments. This can give a rough sense of how much debt your student might be burdened with to attend that school.

Schools use shopping sheets on a voluntary basis, but beware of colleges that don’t provide them. Why are they trying to make it more difficult for you to compare them with other institutions? What don’t they want you to know about their aid offers or graduation and borrowing data?

You should select a college based on many factors, but the shopping sheet gives you useful, easy-to-compare affordability information for this all-important decision.

College Affordability Solutions conducts affordability analyses on institutions students are considering, whether or not those institutions provide shopping sheets. Call (512) 366-5354 or email collegeafford@gmail.com for more information.

Families that struggle with college costs need help. Fortunately, they had friend in Washington over the last eight years — Barack Obama.

The President and his wife are the first couple in the White House to have borrowed for college. Coming from families of modest means, they borrowed a lot, so much that they paid off their college debts just four years before entering the White House. “When we married we got poor together,” the President once said, “we added up our liabilities and there were a lot . . . basically in the form of student loans.”

So although Congress did little on student aid, President Obama’s administration created several helpful initiatives:

Federal Direct Loans. The President’s lone student aid success in Congress established the government, not banks, as the primary maker of student loans. It simplified federal student loans, reduced corruption, and redirected billions in subsidies from bankers to students.

PAYE and REPAYE. The President began the Pay As You Earn and Revised Pay As You Earn programs, which limit what college borrowers must repay to 10% of their discretionary incomes, and forgives what they still owe after as few as 20 years.

Aid Application Process. The administration made the Free Application for Federal Student Aid (FAFSA) available in October, not January, and began collecting “prior-prior” tax year data on it. So students now know what their federal student aid will be as they narrow their college choices. Also, families can now tell the IRS to load key numbers directly onto their FAFSAs, and they now have more time to verify their FAFSA data. All this makes applying for financial aid easier.

So your student’s Free Application for Federal Student Aid (FAFSA) has already been completed and submitted. Now one or more of the colleges to which that FAFSA’s data were sent tells your student it needs to verify those data. Why are they doing this and what needs to be done?

Verification is used to confirm your student’s FAFSA. It’s needed because students sometimes make mistakes when completing FAFSA’s. So do parents whose children are dependent students. It’s also needed because, unfortunately, some families deliberately provide false information to rip off the system.

The U.S. Department of Education processes FAFSAs, and it selects them for verification — some because they likely have incorrect data, others at random. Colleges may also use their own methods to select FAFSAs for verification.

Being selected doesn’t mean anyone thinks you or your student did anything wrong. In fact, colleges may even release financial aid to students before verification is completed. But because they must repay any aid released for which students aren’t eligible, almost no schools do this.

And because there’s never enough money to cover the full financial need of all their students, most colleges won’t even award aid until verification is finished and they know exactly how much need your student has.

So your student (and you, if you too completed the FAFSA) must react quickly to any notice received about verification. Delaying may cause your student to miss out on grants and scholarships because the funds for those awards are all committed by the time verification gets done.

This notice will come to your student by email or regular mail. It’ll provide the key facts:

What FAFSA data need to be verified;

Acceptable documentation for verifying those data; and

Where to deliver that documentation, by when, and what happens if it’s late.

Once the college completes verification, it’ll tell your student:

Any corrections that are necessary; and

What it and/or he or she must do to correct those FAFSA data.

So watch out for verification notices, react to them quickly, and to follow their instructions to the letter. Otherwise, your student may lose grant and scholarship aid, making it much more difficult to afford college without extra borrowing!

College Affordability Solutions can advise you on all parts of the financial aid process, including verification. Email collegeafford@gmail.comor call (512) 417-7660 for assistance.

If you graduated from college last spring after borrowing federal student loans, your loan servicer has already let you know the first of your monthly payment due dates. Chances are that date is this month.

This date is important. Pay on or before it and you’ll build a positive credit rating. Pay after it’s passed, or make no payment, and you’re immediately a delinquent borrower. Then your loan servicer may report your delinquency to the major credit bureaus right away (they must report it you when you’re 90 days delinquent). You’ll have an adverse credit history that’ll result in higher interest rates if you’re even able to borrow for a car or house; may stop you from renting an apartment or signing up for a cell phone or utilities; and could even stop you from getting a job.

Fail to make any payment within 30 days of its due date and you’ll also pay a late fee equalling 6% of what you owe. Miss nine monthly payments in a row and you’re in default — at which point a government-hired collection agency will require you to repay your whole debt immediately. The government may also confiscate up to 15% of your salary and wages, your tax returns, and any money it owes you. It can also get permission from a judge to take real estate and other property you own. Finally, you’ll never be able to borrow another federal student loan while in default.

Fortunately, it’s easy to make your federal student loan payments on time. Enroll in an automatic debit plan and your payment will be deducted from your bank account on the same date every month. You’ll also reduce your interest rate by 0.25%.

If your monthly due date doesn’t work for you, contact your loan servicer and ask to change it. Do the same if you need to change your repayment plan to lower your required monthly month amount.

Need to postpone your payments for a while? You can do this without becoming delinquent. Contact your loan servicer and ask for a deferment or forbearance.

So don’t ever let yourself run late on your monthly payments or, worse yet, miss them altogether. Both produce nasty results, and they’re way too easy to avoid!

College Affordability Solutions has extensive experience with the ins and outs of student loan repayment. Call (512) 366-5354 or email collegeafford@gmail.com if you need confidential advice on managing your college debt.